Our daughter Kathryn has decided to become an entrepreneur. She’s going to work for a start-up company in Boston. She had been working as a consultant for Deloitte Consulting for the past two years, but has decided to go into the world of entrepreneurship. She joins people all over the world who are not waiting for the next government election or waiting to see if Middle East peace is achieved. She’s just going forward – in the words of the Nike slogan – to “Just Do It”.
(And while Maureen and I are entrepreneurs ourselves, and I would encourage anyone who believes that they can work on their own to do so, I have to admit…. it’s harder to give that advice when it’s your own daughter).
All around the world in such far away places such as Vietnam and Africa, individuals are doing just that. They are using the newest technologies to develop their own businesses. While we in the United States have benefited by having the latest smart phone in our pockets, think of the enormous life-changing event a cell phone would have in parts of the world that have never had land-line telephones. This new technology has allowed them to have the essential element of commerce – communication. Entrepreneurs such as small farmers are able to develop a local market with the use of communication tools as well as a motorized scooter to allow them access to a wider selling region. When you multiply this effect by millions of people worldwide, the results are massive resulting in a tipping point of consumer spending.
What will this do for the global economy and the businesses that supply them? Researchers at the McKinsey Global Institute estimate that in 2025 that there will be 4.2 billion people in what demographers call the “consuming class” or those with disposable income. How does that compare to today you ask? That is nearly double the number of people in this category as recently as 2010.
While the two large emerging markets of China and India get all the press, countries in Latin America and Africa also have a growing consumer bases. From 2010 to 2025, the emerging markets are expected to grow their spending by two and half times – from $12 trillion to $30 trillion in spending which will account by then to be nearly half of the total global spending.
With this explosion coming, do you see why the current ‘crisis’ du jour will be meaningless to your long-term investment portfolio. We realize it’s difficult not to loss your focus with the onslaught of nonsense coming from our politicians in Washington. Or by listening to the media as they focus on generating viewers and readers by hyping this risk or that ‘unprecedented’ condition.
However, it is that focus that every successful investor needs to have. Maintaining your focus on your long-term goals and the benefits that will be derived from owning shares in the companies that will supply the goods and services to these new customers will be paramount to maintaining your lifestyle in retirement. Keep focusing on the music and not the cluttered noise.
And maybe someday we can all own shares in Kathryn’s new company when her company goes public! Until then, continue to own the 9,000 publicly traded global companies now available.
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